Abstract The Goods and Services Tax (GST), introduced in India in July 2017, represents one of the most significant indirect tax reforms in the country’s history. Over the past few years, the GST system has undergone multiple structural and administrative reforms aimed at simplifying tax compliance, improving revenue efficiency, and promoting economic growth. Recent GST reforms between 2023 and 2026 have focused on rate rationalisation, digital compliance mechanisms, improved Input Tax Credit (ITC) rules, and technological integration through e-invoicing and AI-based monitoring systems. These reforms have also led to significant improvements in tax collection and formalisation of the economy. For instance, gross GST collections reached ₹22.08 lakh crore in 2024–25, registering a 9.4% growth, demonstrating improved compliance and economic activity. This paper examines recent GST reforms, major policy changes introduced by the GST Council, revenue trends, and their economic implications. Keywords: GST, Economic Impact, Input Tax Credit (ITC) 1. Introduction Tax reform plays an essential role in improving economic efficiency and strengthening public finance. Before the introduction of GST, India had a complex indirect tax structure consisting of multiple taxes levied by both the central and state governments. These taxes included central excise duty, service tax, value added tax (VAT), entry tax, luxury tax, and entertainment tax. The presence of multiple taxes created a cascading tax effect and increased compliance costs for businesses. The Goods and Services Tax (GST) was introduced to simplify the indirect tax system by replacing these taxes with a single unified tax framework. GST follows a destination- based taxation principle, meaning taxes are collected where goods and services are consumed rather than where they are produced. Since its introduction, GST has transformed India’s indirect tax landscape by creating a common national market, improving transparency, and facilitating easier movement of goods across states. However, the implementation of GST also revealed several operational challenges, including compliance complexity, classification disputes, and difficulties in input tax credit reconciliation. Therefore, the GST Council has continuously introduced reforms to improve the system. Recent reforms between 2023 and 2026 have focused on simplifying tax structures, strengthening compliance mechanisms, and enhancing digital tax administration. 2. Trends in GST Collection Since its implementation in 2017, GST has become one of the most important sources of government revenue in India. Over the years, GST collections have increased significantly due to improved compliance and economic growth. In the financial year 2020–21, GST collections were about ₹11.37 lakh crore. The collections increased to ₹18.08 lakh crore in 2022–23 and further rose to ₹20.18 lakh crore in 2023–24. In the financial year 2024–25, gross GST revenue reached a record ₹22.08 lakh crore with an average monthly collection of ₹1.84 lakh crore. Press Information Bureau Monthly GST collections have also shown strong growth. For example, GST revenue in December 2025 reached about ₹1.74 lakh crore, reflecting a year-on-year increase in tax collections and improved compliance levels. Manora May Yearbook +1 These trends indicate the growing importance of GST in India’s fiscal system and demonstrate the success of tax reforms in expanding the tax base. The GST collection trend has been at over Rs.1.4 lakh crore consecutively in the last seven months, however, the GST revenue collection has not crossed the Rs.1.5-lakh crore mark yet on a regular basis. The total GST collection in India crossed Rs.1.5 lakh crores only once in the month of April 2022 when the GST collection of India recorded Rs.1.67 lakh crores. Though the August this year collection of Rs.1.43 lakh crore is up 28% year over year. Of the total GST collection in the month of October 2024, CGST accounted for Rs.33,821 crore, SGST was Rs.41,864 crores, IGST stood at Rs.99,111 crores, and cess was Rs.12,550 crores. We can observe a year-on-year increase in domestic transactions (up 10.6%) and imports (up 3.9%). GST revenue collection has significantly increased since its introduction. Year GST Collection 2017–18 ₹7.41 lakh crore 2020–21 ₹11.37 lakh crore 2023–24 ₹20.18 lakh crore 2024–25 ₹22.08 lakh crore The increase in GST collections reflects economic growth, digital tax administration, and improved compliance mechanisms. Monthly GST collections have also crossed ₹1.9 lakh crore in several months of 2025, showing strong fiscal performance. 3. Major GST Reforms (2023–2026) 3.1 GST Rate Rationalisation (GST 2.0 Reform) One of the most significant reforms was the simplification of GST tax slabs. Earlier GST Structure 5% ,12% ,18% ,28% New GST Structure (2025 Reform) 5% – Essential goods , 18% – Standard goods and services, 40% – Luxury and sin goods, The 12% slab was removed, simplifying the tax structure and reducing classification disputes. India Briefing +1 Luxury goods such as tobacco and high-end products are taxed at 40%, replacing the earlier 28% plus cess system. 3.2 Reduction in GST on Essential Goods Several goods were shifted to lower tax brackets to reduce inflation and improve affordability. Examples: Packaged food items – reduced to 5% GST Medicines and healthcare products – lower tax rates Agricultural inputs – tax reduction These changes aim to support consumers and stimulate demand. Reuters 3.3 Digitalisation and Technology Integration Recent reforms emphasise digital compliance. Major initiatives include: 1. E-invoicing system Businesses must generate invoices digitally for transparency. 2. AI-based tax monitoring AI systems analyse taxpayer data to detect tax evasion. 3. E-way bill tracking Ensures monitoring of goods transportation. These digital measures have improved tax compliance and reduced tax evasion. (The Times of India) 3.4 Input Tax Credit (ITC) Reforms Important amendments were made in ITC rules: ITC allowed only on accepted invoices in GSTR-2B Rejected invoices cannot be used for ITC claims Improved invoice matching system These reforms aim to prevent fraudulent tax credit claims. � DPNC Global 3.5 Biometric and Aadhaar Authentication GST registration now includes: Biometric Aadhaar authentication Document verification through GSTN This reduces fake GST registrations and improves tax transparency. cleartax 3.6 Mandatory Input Service Distributor (ISD) Registration From April 2025: Companies with multiple GST registrations must use Input Service Distributor mechanism to allocate shared services such as: Rent Software licenses Audit services This ensures accurate tax credit distribution across branches. � cleartax 4. GST Compliance and Administrative Reforms Recent reforms aim to simplify compliance. Major initiatives include: 1. Simplified return filing Reduction in number of returns. 2. Multi-factor authentication Improves security of GST portal. 3. Automated scrutiny AI analyses returns to detect anomalies. 4. Risk-based audits Tax authorities focus only on high-risk taxpayers. These reforms reduce administrative burden for businesses. 5. Economic Impact of Recent GST Reforms 5.1 Positive Effects 1. Increased tax revenue GST collections have reached record levels. 2. Formalisation of economy Businesses are increasingly registered under GST. 3. Ease of doing business Simplified tax structure reduces compliance costs. 4. Lower prices for consumers Tax reduction on essential goods lowers inflation. 5.2 Challenges Despite reforms, several challenges remain: Complex compliance for small businesses Delays in tax refunds Frequent policy changes Exclusion of petroleum products from GST Experts recommend further reforms such as including petroleum products and electricity under GST to improve efficiency. 6. Sector-Wise Impact of GST Reforms Manufacturing Sector Reduction in cascading taxes Lower logistics costs MSMEs Simplified registration Composition scheme benefits Agriculture Lower GST on fertilizers and machinery Consumer Goods Sector Reduced GST on FMCG products increased demand. 7. Future Direction of GST Reforms Future GST reforms may include: Inclusion of petroleum products under GST Further simplification of tax slabs Expansion of digital tax administration Strengthening anti-evasion mechanisms These reforms aim to create a more efficient and transparent tax system in India. Conclusion The Goods and Services Tax has transformed India’s indirect tax system by creating a unified national market and improving tax efficiency. Recent reforms, particularly GST 2.0, have focused on rate rationalisation, digital compliance, and administrative simplification. The elimination of the 12% slab, introduction of a simplified tax structure, and adoption of advanced technology for tax monitoring represent significant progress in tax administration. With record GST revenues and improved compliance, the GST system continues to play a crucial role in India’s fiscal stability and economic development. However, further reforms are necessary to address remaining challenges and enhance the effectiveness of the GST framework. References Government of India. (2025). Eight Years of GST: Press Information Bureau Report. Goods and Services Tax Council. (2025). GST Council Newsletter. KPMG India. (2025). GST at Eight: From Reform to Refinement. Ministry of Finance. (2025). Economic Survey of India. ClearTax. (2025). Next Generation GST Reforms in India. Business Standard. (2025). GST Reforms and Economic Impact in India.
R.Shobha (Thu,) studied this question.